Deferred Acquisition Costs and Deferred Sales Inducement Costs

12 Months Ended

Dec. 31, 2020

Deferred Charges, Insurers [Abstract]

Deferred acquisition costs and deferred sales inducement costs [Text Block]

Deferred Acquisition Costs and Deferred Sales Inducement Costs Management updates market-related inputs on a quarterly basis and implements model changes related to the living benefit valuation. In addition, management conducts its annual review of life insurance and annuity valuation assumptions relative to current experience and management expectations including modeling changes. These aforementioned changes are collectively referred to as unlocking. The impact of unlocking to DAC for the year ended December 31, 2020 primarily reflected updates to interest rate assumptions, partially offset by a favorable impact from lower surrenders on annuity contracts with a withdrawal benefit. The impact of unlocking to DAC for the year ended December 31, 2019 primarily reflected updated mortality assumptions on UL and VUL insurance products and lower surrender rate assumptions on variable annuities, partially offset by an unfavorable impact from updates to assumptions on utilization of guaranteed withdrawal benefits. The impact of unlocking to DAC for the year ended December 31, 2018 primarily reflected improved persistency and mortality on UL and VUL insurance products and a correction related to a variable annuity model assumption partially offset by updates to market-related inputs to the living benefit valuation.

The balances of and changes in DAC were as follows:

	2020		2019		2018
	(in millions)
Balance at January 1	$	2,698	$	2,776	$	2,676
Capitalization of acquisition costs	228		291		318
Amortization	(177)		(165)		(355)
Amortization, impact of valuation assumptions review	(100)		(14)		33
Impact of change in net unrealized (gains) losses on securities	(117)		(175)		104
Disposal of business	—		(15)		—
Balance at December 31	$	2,532	$	2,698	$	2,776

The balances of and changes in DSIC, which is included in other assets, were as follows:

	2020		2019		2018
	(in millions)
Balance at January 1	$	218	$	251	$	276
Capitalization of sales inducement costs	1		1		2
Amortization	(13)		(15)		(43)
Amortization, impact of valuation assumptions review	(16)		—		—
Impact of change in net unrealized (gains) losses on securities	(1)		(19)		16
Balance at December 31	$	189	$	218	$	251